Auditor Industry Expertise And The Company Impairment Of Goodwill

In recent years, the number of listed companies with goodwill is increasing and the amount of goodwill growing year by year. After the implementation of the "Enterprise Accounting Standards" issued by the Ministry of Finance in 2006, goodwill asset formed by acquisitions in the duration of operation are no longer mandatory amortization, but requires listed companies to carry on impairment test of goodwill at least in the end of each accounting period. The goodwill impairment compared to other assets not only easily be ignored, but also has some professional difficulty, therefore the listed company for impairment loss of goodwill showed a greater difference.Auditor’s role is to ensure that the company’s financial statements provide a more reliable and related accounting information, but due to the goodwill impairment test is complicated and has technical difficulties in the operation of the program, moreover there is a certain degree of subjectivity, which poses a higher challenge for the auditor’s work. However, auditors with industry expertise not only could be better able to identify the need for more attention to auditing and audit resources, but also could be better able to identify the problems of irrational in goodwill impairment testing process.On the basis of previous studies to sort out,we use 2007-2014 A-share non-financial listed companies’ financial statements show the goodwill as the research sample, examined the effect of auditor industry expertise to goodwill impairment. Our study found that when companies in other conditions are the same, the impact of auditor industry expertise to the company’s goodwill impairment is effective, indicating that auditors can more efficiently find the goodwill impairment test process unreasonable, and they can promote the necessary impairment of goodwill through their industry expertise; Due to different levels of the company’s competition in the market, so the market concentration index was added, found that the higher the degree of market concentration in the industry, the more significant of the impact of auditor industry expertise to the impairment of goodwill; Further, for the company which presence the "cleansing" of earnings management motivation, the higher the level of auditor industry expertise, the more easily find irregularities in goodwill impairment testing process, auditors in goodwill impairment testing process can play a significant role in inhibition of earnings management. Finally, compared to the "big four" accounting firms, the industry expertise of "non-big four" accounting firms’auditor plays a more obvious role. Therefore, to improve the standards based on the subsequent measurement of goodwill, to enhance the operability of goodwill impairment test, to encourage the accounting firms to enhance industry expertise and other policy recommendations.